Now we are doing industry specific analysis. Specific The task or specific environment includes those elements or groups that directly affect a corporation and in turn, are affecting by it. These are government, local communities, suppliers, competitors, customers, creditors, employees/labor-unions, special-interest groups, and trade associations. A corporation task environment is typically the industry in which firm operates. We are choosing textile industry for this analysis. We are doing this analysis with the help of POTER FIVE FORCE ANALYSIS. PORTER FIVE FORCE ANALYSIS OF TEXTILE INDUSTRY IN PAKISTAN
Porter five force analysis consist of following five forces * Entry & Exit barrier * Level of competition * bargaining power of buyers * Bargaining power of supplier * Threat of substitute ENTRY & EXIT BARRIER In entry and exit barrier we are choosing following indicators to understand this force a) Legal environment and Incentive from government in textile industry b) Energy crises Let’s start with legal environment regarding textile industry a)LEGAL ENVIRONMENT Generally speaking legal environment is not in the favor of textile industry.
The Textile Industry was one of those five industries of Pakistan that enjoyed 0% rating facility, which means that their products were not subject to any sales tax. This exemption was given by the government through SRO 509 (I)/2007 dated 9th June, 2007. But recently a new SRO 231(I)/2011 dated 15th March, 2011 has been issued to have changes in the previous one. The applicability of the new sales tax regime for textile sector has become applicable from April 1, 2011 instead of date of the promulgation of the Presidential Ordinance or issuance of relevant notification i. e. , March 15, 2011.
The Essay on Airline Industry And Porter's Five Forces
1.Use Porter’s five forces of competition’ framework to show how the structure of the airline industry has caused low profitability during the past twenty years. Below are Porter’s five forces of competition. In them you will understand what has caused low profitability. The bargaining power of suppliers: Labor is the airline industry’s largest single expense. Most airline ...
This new SRO finished the facility of 100% zero rating and imposed a tax of 4% if the finished fabrics have been sold to the un-registered persons like wholesale market All Pakistan Textile Mills Association (APTMA) has told that government’s actions are not matching with its words for the textile industry. Chairman APTMA said that this government policy is textile industry friendly. a)NO SUBSIDY FROM THE GOVERNNMENT Especially the provisions of Finance Bill 2009-10 are not textile industry friendly at all. Provisions like * Reintroduction of 0. 5% minimum tax on domestic sales 1%withholding tax on import of textile and articles * 16% Federal Excise Duty on banking and insurance services besides Reintroduction of minimum tax on domestic sales would invite unavoidable liquidity problem, which is already reached to the alarming level. The textile industry was facing negative generation of funds due to unaffordable mark up rate The government has raised special excise duty from one per cent to 25 per cent. So instead of given subsidy to the textile industry the government of Pakistan is making unfriendly policies for the textile industry.
So we conclude that entry and exit barrier are very high. b)INFLATION RATE The categories which recorded the highest price increases were: Alcoholic Beverages and Tobacco (18. 5 percent); Recreation and Culture (17 percent); Clothing and Footwear (15. 7 percent); Health Care (13. 2 percent); Restaurants and Hotels (9. 8 percent) and Miscellaneous Goods and Services (8. 6 percent).
The increase in inflation causes the increase in the cost of production of textile good which return in downsizing. The increase inflation also cause reduction in exports of textile. c)ENERGY CRISES
The Essay on Energy Crissis Pakistan
Take the energy sector. Fuelled by a cocktail of US dollars and big business’s traditional soft spot for the ‘stability’ of dictatorship, economic growth went through the roof for a few heady years. Never mind that it was top-heavy and did not benefit the people. Be that as it may, rapid growth coupled with a burgeoning population was bound to increase energy use exponentially. Common sense ...
In spite of the rates of utilities in Pakistan being higher than competing countries, their tariffs are increased on regular basis making the industry un-competitive. The cost of production has also risen due to instant increase in electricity tariff. As a consequence of load-shedding the textile production capacity of various sub-sectors has been reduced by up to 30 percent which, along with other consequences, has also reduced the export order. Due to load shedding some mill owner uses alternative source of energy like generator which increase their cost of production further.
Due to such dramatic situation the capability of competitiveness of this industry in international market affected badly. A spokesman for the All Pakistan Textile Mills Association (APTMA) claimed that 60 to 70 per cent of the industry had been affected and was unable to accept export orders coming in from around the globe, as a result of gas load shedding. Another jerk has been given to the industry in the form of a “Two-day weekend” for the conservation of energy. Either adequate energy resources are unavailable to the industry or the prices of fuel are out of range of the industry.
The textile industry being an energy intensive sector is vulnerable to a higher rate of energy losses across various production processes resulting in higher energy bills, and productivity losses- all of which have significant financial impact We conclude that in extile industry entry and exit barrier are very high. LEVEL OF COMPETITION Two types of competition is facing by textile industry * Internal * External On national stage the level of competition is low because textile industry needs huge investment.
Most importantly now a days our country legal and tax policies are not in the favor of textile industry . Now a days Pakistan is also facing severe energy crisis. The high cost of production resulting is because of increasing energy crisis. So on internal level this competition is low because of unattractiveness of this industry. While on international level industry is facing competition from other developing countries like Bangladesh, India. China also competing Pakistan in major export markets i. e. the EU and the USA. Also the current recession in the West has resulted in slowdown in demand for textile products. Due to all the other problems faced by the Textile Industry, its production capacity and quality is getting low. So Pakistan is lagging behind its competitors in the sphere of this international and regional competition. This is a huge threat to the Textile Industry of Pakistan. No of player is low to moderate but the rule of game is very high. So, we conclude that in textile industry level of competition is very high. BARGAINING POWER OF BUYERS Bargaining power of buyer is very high because of new emerging trends of WHO .
The Term Paper on Environmental Impacts Of Textile Industry
Have you ever had a chance to think how clothes can destroy our environment? The textile industry covers a lot from business around the world. You can find textile industry in the manufacturing of fabrics, the different chemical companies that make synthetic fibers and all resultant products that you can find in your own furniture, cars, and of course all clothes that you wear. Textiles are ...
In past USA and EU was the major importer of Pakistani textile goods but not now. Pakistani textile industry is achieving the national quality standards very hardly It is not easy for Pakistani textile industry to achieving international quality standards. Now a day WHO quality standard is the metals of most immediate concern are chromium, Zinc, iron, mercury and lead. The fate of these chemicals varies, ranging from 100% retention on the fabric to 100% discharge with the effluent. Most of these metals are non-degradable into non-toxic end products.
Experts say that textile wastewater contains substantial pollution loads in terms of COD, BOD, TSS, TDS and heavy metals. The values of these parameters are very high as compared to the values in National Environment Quality Standards (NEQS) set by the government. United States cancel more than 50% of textile orders of Pakistan . US also impose a high duties on the import of textile of Pakistan which effect the export in a bad manner. US & EU are the major importer of Pakistan textile which creates a huge difference in export of Pakistan textile after imposing restriction on import of Pakistani textile goods.
BARGAINING POWER OF SUPPLIER Bargaining power of supplier is low because of the new emerging trends of WHO . Now the buyers have very much power to exercise as compare to suppliers. So, bargaining power of supplier level is low. THREAT OF SUBSTITUTE In textile industry threat of substitute is low because people don’t have any option to purchase another product to satisfy their need. As USA cut off 50% textile trade from Pakistan but it does not mean that USA find a substitution for textile products .
The Term Paper on Power Factor Correction
It gives us an immense pleasure to write an acknowledgement to this project report, a contribution of all people who helped us realize it. We take this opportunity to express our respectful regards to our beloved principal Dr. N. C. Hiremath for permitting us to do this project. We express our deep sense of gratitude and appreciation to our beloved HOD Prof. S. B. Patil for this enthusiastic ...
In fact they shift to another suppliers as China ,Bangladesh or India. So we conclude that threat of substitute is low . Poter Five forces | LOW| MEDIUM| HIGH| Entry & Exit barrier| | | | Level of competition| | | | Barganing power of buyers| | | | Barganing power of suppliers| | | | Threat Of Substitute| | | | CONCLUSION Porter five forces results show that textile industry is not a favorable business in Pakistan to operate. Among the five porter forces three are listed on table as high and remaining two are listed as low . So simply the answer to start a textile business in Pakistan is in no.
